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Full text of "A case study of the effects of the abandonment of a railway line : Shermand and Wasco Counties, Oregon"

Faculty Working Papers 



A CASE STUDY OF THE EFFECTS OF 
THE ABANDONMENT OF A RAILWAY LINE- 
SHERMAN AND WASCO COUNTIES, OREGON 



John F. Due 

#205 




Transportation Research Paper #5 



J 



College of Commerce and Business Administration 

University of Illinois at Urbana-Champaign 



FACULTY WORKING PAPERS 
College of Commerce and Business Administration 
University of Illinois at Urbana- Champaign 
September 10, 1974 



A CASE STUDY OF THE EFFECTS OF 
THE ABANDONMENT OF A RAILWAY LINE- 
SHERMAN AND WASCO COUNTIES, OREGON 



John F. Due 

#205 



Transportation Research Paper #5 



A CASE STUDY OF THE EFFECTS OF THE ABANDONMENT OF A RAILWAY LINE- 
SHERMAN AND WASCO COUNTIES, OREGON* 



John F. Due 
Professor of Economics 
University of Illinois, Urbana 



*The author is greatly indebted to a number of persons who assisted 
in this study, particularly: Mr. Thomas W. Thompson, County Extension Agent 
of Wasco County; Mr. Robert Brisbine, Manager, MIDCO Grain Growers Association, 
Moro; Mr. Paul Patrick, Manager, Sherman Cooperative Grain Growers Association, 
Wasco; Mr. Joe Hood, Manager, Dufur Elevator Company; Mr. Ray Hughes, Manager, 
Hughes Feed and Fuel Company, The Dalles; Mr. Frank Adams, Manager, Interior 
Elevators, The Dalles; Mr. Giles French, retired Editor-Publisher of the 
Sherman County Journal; Mr. C. H. Burnett, Vice President, Union Pacific 
Railroad, Portland; Dr. Stephen Thompson of the Interstate Commerce Commission 
staff; The Dalles Chronicle and The Sherman County Journal for access to 
their files of back issues; the Department of Economics, University of 
Illinois, for research funds; Professor Ben Alien for his suggestions. 



Digitized by the Internet Archive 

in 2012 with funding from 

University of Illinois Urbana-Champaign 



http://www.archive.org/details/casestudyofeffec205duej 



On the evening of the 17th of December, 1964, a Union Pacific local 
freight, with 40 cars of wheat behind two diesel units, crept slowly down 
Spanish Hollow, northbound from Kent to The Dalles, in north central 
Oregon. The flanges of the boxcars squealed on the sharp curves; the 
engineer tended the brakes carefully on the 3.47 percent grade that terminated 
at the main line along the Columbia River. The train had gone up early 
that morning — the two GP9s working hard to take 39 empties and a car of 
diesel fuel up the grade. The train approached the main line at the foot 
of the grade; the switches were opened; the last boxcar and the caboose 
swung across the switch, and the train gained speed on the 17-mile run 
down the main line to The Dalles. No member of the crew, no one in the 
towns in which the train had been gathering the cars of grain, ever thought 

for a moment that never again would a freight train come down Spanish Hollow 

1 
out of Sherman County. 

The primary purpose of this paper is to consider the effects that the 

ending of service had upon the economy of Sherman County. 

The line involved was the Union Pacific's branch extending from Biggs, 

on the main Omaha-Portland line 17 miles east of The Dalles, 52 miles to 

Kent, and, prior to 1943, an additional 17 miles to Shaniko. The line 

served Sherman County, and, prior to the 1943 abandonment, the southern 

portion of Wasco County. Study was also made of a second line twenty miles to the 



This introductory paragraph is somewhat apocryphal in detail but 
not in substance. 



-2- 



west , the Great Southern, extending south from The Dalles 41 miles to 
Dufur and Friend. 

THE COLUMBIA SOUTHERN, LATER THE UNION PACIFIC'S SHANIKO-GRASS VALLEY BRANCH 

1 
Settlement of the Area 

The Columbia River directly east of the Cascades is located in a relatively 

deep gorge. The land to the south rises abruptly to an elevation of 1,000 

feet, and then continues to rise more gradually to approximately 3,600 feet 

on the Shaniko plateau, 75 miles to the south. Beyond Shaniko, the land 

falls precipitously 1,500 feet to the valleys of the Deschutes and the 

Crooked Rivers and their tributaries. The portion just south of the 

Columbia is deeply eroded by narrow canyons, and cut by two major rivers, 

the Deschutes and the John Day. These two rivers are, like the Columbia, 

cut deeply into gorges, in most areas inaccessible from the plateau above. 

There are only two crossings of the Deschutes between its mouth and central 

Oregon (Sherar*s and Maupin) . The area to become Sherman County was that 

located between these two rivers. The pioneers avoided this rough, nearly *_.„<=- 

less, and barren country, and headed for the more congenial Willamette Valley. 

Ultimately a major immigrant route crossed the area, swinging south from 

the mouth of the John Day River and crossing the Deschutes at Sherars Bridge, 

headed for the Barlow road around the south side of Mt. Hood — but no 

immigrants tarried. A few settlers came in the late 1860s, primarily 

grazing cattle, but not until the late 1870s and early 1880s was the area 

actually settled, after the discovery that the hills would grow wheat 

satisfactorily if cultivated only in alternate years. 



The best history of the area is The Golden Land: A History of Sherman 
County , by Giles French (Portland: Oregon Historical Society, 1958). 



-3- 



Wheat production began about 1880, but not until the coming of the 
Oregon Railway and Navigation line (later Union Pacific) in 1882 along the 
Columbia did it develop on a large scale. By 1885 the output in the 
county was 1.5 million bushels. But the wheat had to be hauled by wagon 
down the steep grades to the Columbia — from as far south as Kent, 
requiring three or four days. The John Day and the Deschutes, 

to put it mildly, are not navigable. In 1889, the settlers sought a 
county of their own, and Sherman County was created out of Wasco County, 
consisting of the area bounded by the Columbia, the Deschutes, and the 
John Day. Despite strong efforts to extend the county all the way to 
Crook on the south, it was cut off just below Grass Valley; later the 
boundary was pushed farther south, but to this day Wasco cuts below it to 
meet Jefferson. The village of Moro was chosen as the county seat, 
although Wasco was the larger town, as the voters of Grass Valley preferred 
a county seat farther south. 

The Building of the Railroad 

The settlers of Sherman County were faced with two major concerns. 
One was the land title situation; alternate sections in a six-mile strip 
had been granted by the Federal government to The Dalles Military Road 
Company in 1870, which in turn sold it in 1876 to a San Francisco firm, the 
Eastern Oregon Land Company. Primarily this grant affected the southern 
part of the county. There was dispute over land titles, and the Land Company 
sought prices that the farmers, who were renting the land, regarded as 
intolerable. Not until the 1930s was the land situation entirely cleared 
up. The second was the lack of a railroad, which limited grain production 
and made travel laborious. 



-4- 



After various false starts, on March 4, 1897, the Columbia Southern 
Railroad Company was chartered to build a railroad from the Columbia River 
via Sherman County to Prineville and other points in central Oregon. The CS 
was initiated by E. E. Lytle of The Dalles. Lytle was associated with the Oregon 
Railway and Navigation Company (Union Pacific) , and the road had Union 
Pacific financial assistance, but he operated with considerable autonomy. 
The line was started in June of 1897 at a point named Biggs on the 
OR and N (Union Pacific) main line at the foot of Spanish Hollow, 
and was completed as follows: 

Wasco October 6, 1897 

Moro January 15, 1899 

Grass Valley March 27, 1900 

Shaniko May 13, 1900 

Moro provided $5,000, Grass Valley $1,000 toward construction. 

The road immediately established passenger and freight service, 
the passenger train connecting with the day trains to and from Portland, 
making the run down to the Columbia in the morning, ui in the afternoon 
(Figure 4). In 1902, it carried 29,080 passengers — about 40 passengers 
each way daily. The line was cheaply built — as was typical of most branch 
lines in the west in the period — no ballast, minimum of grading, 56 pound 
rail laid without tie plates. But it was soon handling a substantial 
volume of traffic, not only for Sherman County, but for the vast area to 
the south, for which it was the nearest railhead. Passenger and freight 
traffic to Prineville — the metropolis of all central Oregon in the period — 
was carried by the railroad. It is reported that for the next two decades 
Shaniko — itself capable of generating little traffic in anything — became 




*>! 



^•^ 



o 



a> 






oN 






o" 







© 





i 



Ba.sed upon Topographical Hap 



r ■ 









Figure 








JON 

'6 



_ 



■a '• 






i r . 






J 



Colombia Southern Railway 
Company 



TIME, TAB&E, 

Eff&eUve tStOt a* m» 9 September 9, tgoo 


First Class 


STATIONS 


First Class 


Soath Bound 


North Bound 


HO. Z 

C-AtLY 
PASSCNOBII 


NO. 1 

oAtcy 
PAsaeNQER 


l^eave P. M. 


Arrive A. M. 


f 1 34 

1 69 

2 14 

3 27 
2 33 

2 45 * 
£48 

3 00 
3 09 
3 19 

3 44 

4 06 
4 28 
4 40 
6 20 


•»ttMM»»a«MM •» A" £lS0O ••••*»•••**•••♦••"• 
a. t»..*».°. .H.... OilUilijt't • »«*»«•*►••*•••»«• 

—Hay Caayon Jimofcloa- • 
..........._ McDonalds .«—.«—. 


1.1 25 

1 1 00 
10 45 "• 
10 30 
10 05 . 
10 15 
10 IS 
10 00 

9 60 

39 

9 15 

8 65 

8 40 

8 30 

8 00 




■*•*« »•«•' SiiA-iSf IlitO «»•*•»••■•«• i«- 


Arrive P. M. 


I^ave A. M. 





Daily Stage Line Connections 



TO — 



ArrrsiyOPH cross keys 

GRIZI.EY PRINKVIIAS 

FOSSIT AS 11 WOOD 

MlTCHKJ.tr JPAUM^A 

RIWBY PRICE 

SISTBRS pasley 

LAKEVIKW LAMONTA 
*ANTO«*l? tDAYVIIXR f JOHN DAY 



HAY CREEK 
CLAKKO 

GRADE 
MO WRY 

BURNS 

SILVER LAKE 
WARM SPRINGS , 
fCANYON CITY 



Figure 4 



-5- 



the largest shipping point for wool in the United States, produced in the 
vast area to the south. 

As noted, the original plans called for extension of the line to 
Prineville, and for a d ecade there were many announcements that con- 
struction would soon start* And there appears little doubt that the Lytle 
management did wish to build south. But there was one great obstacle: 
the 1,500 foot drop off south of Shaniko. The two alternative wagon routes, 
the main one via Cow Canyon, the second via Antelope Canyon, were regarded 
as among the most difficult roads to travel in the west. And there was 
little logic in hauling all central Oregon freight up this 1,500 foot grade 
and then back down to the Columbia over a rail line not well built at best. 
Suddenly, in 1905, Lytle resigned as president— -probably forced out by the 
Harriman interests of the Union Pacific— and the following year all CS 
directors were replaced by Union Pacific officials; in July, 1906, the 
Columbia Southern was leased by the OR and N and in December. 1910, 
purchased by the Oregon - Washington Railway and Navigation Company, 
successor to the OR and N. Thenceforth it was operated as an integral 
part of the Union Pacific, which absorbed the 0-W January 1, 1936. To 
this day, however, this line is referred to in the area as the Columbia 
Southern. Complete Union Pacific domination involved the end of the plans 
to build south; by now the Union Pacific had decided that if It were to 
build into central Oregon it would do so via the Deschutes canyon, to 
avoid the grades of the Shaniko route. 

Meanwhile, operations continued much as before on the line. The shops 
were built in Shaniko, the town being created by the railroad and sale of 



-6- 



lots promoted. The other four towns on the line had all existed prior to 

the building of the railroad; the circuity of the line was, in part, a 

product of the desire to reach these four towns. 

In 1909 occurred a chain of events that was in the end to play a 

major role in the demise of the Shan ike line. In view of the prospect 

of lumber development in central Oregon, both the Union Pacific and the 

Hill interests (Great Northern, Northern Pacific) build lines southward 

from the Columbia down the gorge of the Deschutes, the Hill line — the 

Oregon Trunk — on the west bank, the Union Pacific on the east bank. When 

the lines reached Metolius,an agreement was reached to avoid further 

duplication and a single line was built into Bend; ultimately all duplication 

was ended and both roads used one track (most of it being the Oregon Trunk's 

line). The effect of the construction was a temporary boom on the Shaniko 

line hauling materials for the new road, but after operations opened to 

Bend in 1912, the new lines took all of the central Oregon traffic— freight, 

passenger, mail, express. The Shaniko line now became strictly a dead-end 

local branch. The new lines were of little benefit to Sherman County (except 

for tax revenue on the UP line) ; because of inaccessibility they might as 

well have been in the Fiji Islands. A few farmers did haul wheat to a 

loading station at Sherar's Bridge, down a steep and rocky grade. 
Changes in Operation 

The loss of the through traffic and the limited population of Sherman 

County soon brought the end of separate passenger train operation, and the 

daily train became a mixed train, handling freight and passengers. Then 

came the motor vehicle to eliminate most of the passenger traffic. To 

facilitate mail, express, and LCL freight traffic, operations were shifted 



-7- 



from day to night, and for a number of years, as shown on Figure 5, a 
connection vas made at Biggs (aroui. . 3 AM ) with the night train from 
Portland. The two lines to the east — the Condon and Heppner 
branches— were operated in similar fashion. By 1930 the train was going 
only to Grass Valley except four days a week; by 1934 all service on the 
line was tri-weekly; in 1936 the train became a "freight train" carrying 
passengers on irregular schedule, as shown in Figure 5. Also in 1936 the 
UP contracted with a truck line to haul the mail, express, and LCL traffic 
and bus service handled passengers. In 1940, service became only bi-weekly- 
and by 1942 the UP passenger timetable no longer showed the trains. Two 
passengers were carried in 1940, eight in 1941. 

Apart from the loss of the LCL traffic, the rail traffic remained 
relatively constant, as shown in Table I — primarily wheat outbound, with 
some cattle; coal, petroleum products, feed, fertilizer, and farm machinery 
items inbound. Already most livestock and wood were moving by truck. But 
by the end of the thirties, with the worst of the depression over, there 
was little thought that the UP might consider abandoning the line. 

The Abandonment Application 

On June 6, 1942, completely unexpectedly, the Union Pacific applied to 
the Interstate Commerce Commission to abandon the line, and indicated that 
the track had been requisitioned by the Metals Reserve Corporation (a 
Federal agency) ac the request of the War Production Board to provide 
rails and equipment for defense purposes. It was generally believed- in 
the area that the idea to abandon was not the UP's, but the WPB's — that 
someone in Washington had looked at a map ? seen, that this line appeared to 
be very close co the Deschutes canyon line, and decided that it was an 



Figure 5 

TRAIN SCHEDULES ON THE SHANIKO LINE 
1930-1941 



June 1, 1930 



February, 1934 



ttB| 

r m 
10 45 
•AM 

410 

4 2-- 

4 5S 
500 
5» 

s-?s! 

5 5"i 

6 to 
<S«S 

?«c 
8?c 



Table 72. 
BjQGSABO SKANiXO. 
jt QglMiJ y«« i I i'w 1 B5 

r K ;.,.. is*vp: j n«Ktv«j v M j » M 
l345'....;...Poftl3»i!»...i 7 i< 



li'30 
4>» 



. .'l«a*;-.1 [asrivkoamwam 



"5 



11 is 



„ Biggs ..$! 

. i^L.Tbornberry ..jiajs 

430) 7.») Siat ill! 

c.tU -.. Waieo .. A|j»os|tio<; 

i».»!,.. Klondike... It SOttl ID 

S»n«Jon... .111 Win 21) 



430 

«$s, 

;=o 16. 1 .. 

caolu.aj r*'i»h .....jiOsC I860 

S W«3«"« *>« Mo " ••• 103V10S5 

is3«.a Moro..iilB20;10«l 

e Mhe.M.... Rrakine ..„ S 48] 8 S3 



6 ~l 

« 45 #.$•• Gr3UiV«Hey&[5815 

A M U$.lj Biurbon ...I t H 

j5*-S K«« •••• 

!s».t!... Wilcox. ...I.... 

..'o^.7i-!-.5S3ai!to 5 



31s 

ISS 



r746 



A Mi ! UaatVfi [I.SW* 1 ;f M 







PORTLAND, 3IG0.3 AND SHANiKO 












Mis. 


Taalo No. fi|^» 


Mued 
126-17 

♦7.35 

iill .55 

;1i.20 
tn .is 

11.05 

(1i>.3(J 
(10.15 
DO 05 

9.55 
f 9.35 

3.15 

S.1S 
f B.55 

B.3S 
f 6.20 
h 7.45 









_-y~~ 


- 

1 

4.10 

1 4.ie 




6 

v 

14 


Lv... Po;-tlond OlO. . • 

t- 

U aiaca19-. " *r 

" " " 

" Wasco " " 

*. Klondike " " 

" ....Sandon " " 

".. ...Nisli ..." - 

" IfeMosa " " 

" Muroj " " 

" ....Erskltw " " 

ir Ct " y 

. alley. .. " kr 

" bourbon. _ " " 

"..-•- KiMit •' " 

" Wilcox " " 





































::::::::":: 






. . j 








f '<.: 
S.c 
f 5.2! 

ti.OO 38 
fc.O' 

1 e.3q <e 

6 4 
f 6.69 57 
s 7.26) 6'J 























"•" 






:: .:.:':::::: 











*r Shfenlko- " Lv 








/ Lc-wlay And Saturday. 
• »Tuf.'d»y, Thursday and Saturday. 
>/Fli.f( stop. • -.' r>s 

"j Sunday, Monday, Wednesday and Friday. 
... 1 Saturday o«lv. 
.. lyjVrrr. 

AMbier, ■_,_•, t - 

. - • t ;• . ' 



■ MittdtTTJn 



7SJttu&4^i44i^;l'^:.-^ ^i4^: 



.ii 



•Oj.iy. f Dally **cept Sunday, j Sunday "pt'.ly. X t>ii!y except Monoay. (••) Monday only. 1 
' (o) Tv>;. and Sat only, (d) Stops to iat orf pa^n« passanaari Irom main Una p-^inb MSt « Shaman. I 
(0 S;_v.s only on signal. (h)iTuisdty, Thursday, Saturday only G) Monday, vVedneaday, . r rt<^)(| 
0.-.'/- ifc) Dally except Saturday, (rri) Except Saturday an i ;;:..,1a»-. (n) Saturdiy cniy. (a] 
day, .'.-'' .«s.1ay and Friday only, (v, 0_i!y tlxcopt Saturday ur.d Sunday. • lozsi rf&iQ'.it, same*; 
^'3. Sue Note Next pafle. 



December. 1935 



'Fraiortt 326 



No*. 325 and 336 
era fraijihi trains 
carrying paasenoars. 
Schadule is irregu- 
lar. Mondays from 
The Dalles to Snars 
Iko; Tuesdays from 
Shaniko to Biggs, 
and Siggs to Qrau 
Valley; Wednesdays 
from Crass Valley 
to Biggs and return ; 
Thursdays from 
Qrasa Valley tuBir>g; 
and return; fr-.iuys 



BIGGS—SHANIKO 



Table No. 

Pacific Time 



96 



Freight 325 



■ .Bls»9*23--- 

... -_ ..TaorobenTr..—, 

- - 4 «nk....r. M . 

WS5«J „. 

........ Klondike ... 

.... Sacrjua ,.... 

Nlsb 

.. Bo Mas 

--.-.. ....Mora... ....... 

Efat!r»__. 

. Grass V«ii(iS.„.. J .. 

Grass Valley 

.....„Bo«xhoa. ....... 

Keni..... 

Wilcox 

...... -gHatw ltea . . 



from Grass V.-iley 
to 8igj)s, a^3itigj 
to Snjiniko; oatur- 
urciays from Shaniko 
ta The Da les. No 
servico oi Sundays 
Mount Hoed iuoes 
operate a bus line 
v/uh daily service, 
ieiVii-Q Shaniko 9.40 
a. m. and a 
Oiggs Jet. 11.20 
a.:vi; ieava Bggs jet. 
4.05 p.m. and arrivs 
Shaniko 5.f» p. m. 



March, 1939 



Freifhl 326 



Ho. 326 is a freight 

tram cs trying pas- 
sengers on sri ir- 
regular sthedtrle 
between The 
Dalles srtd Shan- 
iko. Leaves Thr; 
Oailes on Mon- 
days, Wednesdays 
and Fridays. 



THHotei 

I Bus IMIs, 
Daily | 
3 3C 



Shaniko 



j Daily 
"L»JK 



4 471 

s.'OSj 

'i.'aa 
'e 03' 



14j ,: 

ifi - 



Table No. 
(.Pacific Time) 

i / _'_Tbi r f»ille'<r 
Lv Klstcs 6. . . ." 

•• Tbotobtfrry. 

" Will. 

'• Wasro 

Klondike.. . , 

S.miioii 

N is!: 

DeMoss 

Moro ...... 

i« 

Grass Val 

Dourbon 

Kt;nt 

Wllcoi 



On- 
"Ore 



•Metai 
/•' 11.59 



11.05 



lll'.V 



GSfAl SJjaul^o 



lv; 



i6."47j 

io'?il 



Freight 325 



No. 325 is a freight 
trai a carrying pas- 
sengers on sn'ir-" 
tegular icfiedule 
between Shiniko 
sns? The Djllei. 
Leaves ShemKo 
on Tuesdays, 
Thursdays and 
Saturdays. 



February, 1941 



Freight 326 



No. 326 is a freight 
train carrying pas- 
sengers en an ir- 
rs^uiar schedule 
between Tho 
Dalles and Shan- 
iko. leaves The 
Dalles on Tues- 
days and Fridays 



Bisia-s 

'Motor 
Gut Mis 



Shaniko 



Table N'o. 



(Pacific Time) 



Daily 
J CO . Lv The Daltea. .Ore 

lv"1J!5^s S. 

3 " 'Ffcornberry. . .. " 

Siai « 

Wasco. " 

K'oiidiko. . . . . " 

SandOD " 

Nlsh " 

DeMoss ,. " 

N!<)r<> "' 

Krsklno. .... " 
fira^s Valley. . . " 

Bourbon " 

Kent ,: 

WUcot 



*m. * fMitot'l 

91 ; 



Daily 



3.52j 
I 



4 14 

'4".36J 
.1 



5.00; 
'5'30 



7' 

9 ' 
14. ' 

«i' 
301 ' 
?!',■ 
.■: ■ 
31 ' 
3S ' 
Ab ■ 
52 ' 
57i' 



69 Ar Miatilko 



Ar 
Lv 


"12 id 


" 




u 


i 




■ 
11. oo 


1, 


10.371 


•• 


10 17; 


Lv 





freight 32S 



NO. 325 is a freight 
t r .i i n tarrying pas- 
sengers on an it- , 
regular schtduls 
between Shanito 
and The ja. ; ies 
Leaves Shanika 
on Wednesdays 
and Saturdays. 



TABLE I 



DATA RELATING TO THE SHANIKO LIKE PRIOR TO 1942 



A. 


Traffic, 


1941: 

Commodity 

Wheat 

Livestock 

Coal 

Petroleum Products 

Miscellaneous 


Cars 

904 
73 
29 
64 

120 








Total 


1,190 


or 44,051 tons 



B. Net Revenue, 1941: 

Revenue attributable to the line, on and off the branch $131,191 

Expenses of operation of the line: 

Maintenance of way 48,218 

Maintenance of equipment 3,084 

Transportation 22,770 

Miscellaneous 26,203 

Total 100,275 

Expenses, handling traffic off the branch, on operating 

ratio basis 63,934 

Taxes 14,297 

Net Deficit 37,569 



C. Traffic and deficits over preceding years: 



Year 



Cars 



De ficit or Profit" 

+ 31,905 
+ 20,250 
+ 24,217 

- 11,480 

- 21,322 

na 



Using the I. C. C. formula for determining expenses of handling the 
traffic off the branch. 



1937 




1,785 


1938 




1,530 


1939 




1,683 


1940 




1,337 


1941 




1,190 


1942, 


6 mos. 


539 



SOURCE: I. C. C. FD 13780 



-8- 



ideal candidate to release steel, and the IIP simply went along. Another 
version is _hat the UP was pressure by WPB to offer lines to free steel— 
and concluded that this was one of their weaker ones. The Union Pacific's 
president, Jeffers, played a key role in the defense production hierarchy. 
Regardless of where the idea originated, the Union Pacific pressed the 
case— which immediately brought protests from the shippers, the communities 
served, labor, and other groups. Hearings were held. The Union Pacific's 
case was essentially that the line was of marginal profitability at best; 
that some traffic was being lost to trucks; that some bridges needed 
rebuilding; and that the line had been requisitioned anyway. 

As of 1942, 37 miles of track were laid with 90 pound rail (entirely 
adequate for branch line service), 31 miles with the original 56 pound rail, 
all on the southern end of the line. The road was replacing 5 percent of 
the ties annually; the UP granted that there was no deferred maintenance, 
except for the need to rebuild three bridges. The line was being operated 
with a steam locomotive, a Consolidation^with tractive power of 43,305 
tons, weight 189,000 pounds, that was kept in The Dalles and used only for 
che Shaniko line (typically four days a week). Given the grades, the 
locomotive could move 700 tons northbound, 345 tons southbound,, or about 12 
loaded cars. About 10 hours were required for the southbound trip, eight 
hours for the northbound; thus the train took two days to make the round 
trip. A crew of six men was utilized. In addition to the crew, there weio 
nine' maintenance of way employees and four station agents (Wasco, Moro, 
Grass Valley, Shaniko). 



A wheel arrangement of 2-8-0, with low drivers, designed for low 
speed freight operation with steep grades. 



-9- 



The Union Pacific estimated the salvage to be $221,000 for the rail, 
$8,450 for the land. 

In its application the Union i .icif ic stressed three basic arguments: 

1. The losses of the last two years. 

2. The requisition of the rail for defense purposes. 

3. The fact that trucks were handling some grain, and could handle more 

The application led to strong and united protest from all parts of the 
county — the three cooperatives and other groups. Money was raised to send 
three community leaders to Washington to fight the abandonment. The 

protectants stressed several elements: 

1. The line had been showing a profit consistently until 1941; the 
trouble currently was temporary, caused by the loss of export wheat markets 
resulting from the war. 

2. Virtually all the grain continued to move out by rail — an estimated 
97 percent. 

3. There were no suitable alternatives for moving the grain out. 

4. The wheat rates had been reduced drastically by the UP to dis- 
courage truck and water movements, and were far below the maximum figures 
prescribed. For example, the rate from Shaniko had been 25 cents in the 
1920s; it was now 12V cents. With higher rates, the road would show a 
profit. 

Division 4 of the Commission recommended against any abandonment, on 

the basis of the arguments of the protestants. Meanwhile the Metals 
Corporation released its hold on the rails; there had been too much national 
outcry and pressure from influential legislators, including Oregon's 
Senator Charles McNary, against the policy. The case was appealed to the 
entire commission, and on July 26, 1943, it reached its decision: the 
portion south of Kent offered too little traffic to warrant continuation; 
only the elevator and warehouse at Shaniko were served, and only the 
elevator operator protested. Thi ">n, with its light 56 pound 



-10- 



rail, was in the poorest condition and the source of the deficit. 
The wool from the area was already being trucked. The 

Commission concluded that the remainder could be operated at a profit and 
that the large volume of wheat being shipped could net be handled by trucks. 
The shippers at Shaniko persuaded che Commission to defer the effective 
date from July to November 30, 1943 to*allov the elevator to move out 
the wheat, and as of that date the southern portion was abandoned and the 
rails pulled up. The Union Pacific did not protest the decision and pro- 
ceeded over the next several years to make some improvements to the line. 

1943-19 64 

For the next twenty-two years, operation of the line- — now called the 
Grass Valley line — and traffic changed very little. The old Consolidation 
went the way of all steam locomotives in the period and was replaced by 
diesels; by using two in multiple, it was possible to increase the load 
materially, and with the line shortened to Grass Valley it was now possible 
to make the round trip in one sixteen-hour day. Service was no longer 

scheduled, trains being operated \ ten traffic warranted, but in practice 
this meant from once or twice a week. One of the great advantages of grain 
traffic is that high frequency is not required. It is highly important 
to move the grain in quantity when the shippers wish to ship— but no need 
to provide daily operation, as with much manufactured goods traffic- There 
was no further talk of abandonment; the Union Pacific was apparently satis- 
fied with continued operation of the line. 

The Fatal Day 

The area directly south of the Columbia River has long been subject to 
flooding. Sudden summer cloudbursts are not uncommon in this low rainfall a* 



-li- 



the canyons coning down to the Columbia are steep and narrow and water 
can rise very rapidly in them. (3y contrast, the Deschutes never varies 
significantly.) In 1903 a summer flood devastated much of the area and 
wiped out the town of Heppner, killing 200 persons out of less than 1,000 
population. The Grass Valley line had always been subject to some flood 
problems, most of them not serious. 

In December of 1964, cold weather came early, and in the week of the 
15th, froze the ground, which lacked snow cover. Next came a 12-inch snow- 
unusually heavy for an area that does not get much snow, Then on the 20th 
and 21st the temperature went up into the mid-fifties and the rain began. 
Five inches of rain fell — half the normal annual total — on the snow, under 
which lay frozen ground, unable to absorb moisture." The result was 
disaster on the night of the 22nu-~23rd J The business districts of Wasco 
and Moro were under water, all communications were out, and roads blocked. 
The creeks went high out of their banks, pouring flood waters down the 
steep canyons. One of the most serious casualties was the railroad line. 
When the rain and flood subsided, a heliocopter was used to survey the line, 
Stretches of railroad had vanished — rails, ties and grade — and in places 
there was no evidence that there had ever been a railroad. 

Initially it was presumed that the line would be rebuilt; but within 
a month there were rumors that the line would not be rebuilt, or noi. above 
Hay Canyon. The UP commenced to salvage rails, ties, and bridge timbers. 

Then late in January came a second and almost as severe flood — taking away 

« 
most of the salvaged items. 



Since records had been kept in Moro, beginning in 1912 % never before 
had there been two days in a row with a total of more than one inch of rain 



-12- 



Forty-four freight cars had been left stranded, many loaded with wheat. 
A train had started from The Dalles on the 21st but hed been stopped before 
it turned up Spanish Hollow. In March these cars were removed by truck, 
the bodies being lifted by crane off of the wheels after the grain was emptied. 

The elevators commenced to move some grain by truck. On April 21, 1965 
Union Pacific President Bailey wrote Sherman County Extension Agent 
Thomas W. Thompson that the railroad was not certain about rebuilding but was 
making aerial surveys. The Sherman Cooperative sought an answer in May 
but did not get one — except that there would be no service in 1965. The 
Sherman County Journal, in an editorial written by Giles French, the long- 
time editor and writer, commented on the good relations with the UP and 
hoped that the line would be rebuilt. But on July 13, the railroad announced 
that it would petition to abandon — and in turn was sharply criticized 
editorially by French. In a letter to Thompson in August, the road 
explained that the cost of rebuilding was excessive, given the traffic. 
On August 2 the petition to abandon was filed. Hearings were held at 
The Dalles in the week of January, ^966, and on June 9, 1966, the examiner 
filed his report recommending abandonment, which was approved by the 
Commission. 

Background to Aba ndonment Ev aluation; Sherman County Agri culture 

Analysis of the abandonment and its consequences requires some review 
of the nature of agriculture in Sherman County. The county has a land area 
of 531,000 acres, of which 55 percent is tillable, the highest in the 
state; the state-wide average is only 8 percent. It is the only county 
in Oregon to have no timber. The soil is productive but lacking in 
organic material; the thickness of soil and the quality are best in the 



-13- 



north and much poorer in the south. The rainfall, which averages eleven 
inches for :he county, varies from if teen inches in parts of the north 
to ten in parts of the south. The result is that south of Kent and into 
southern Wasco County, the yields are low, and substantial areas are not 
tilled, being used only for grazing. Almost none of the land is level, 
ranging from barely tillable slopes (or ones not tillable at all in some 
of the canyons) to gentle ones, especially in the Grass Valley area. The 
elevation ranges from 185 feet at the Columbia to 3,600 feet near Kent. 
It was discovered in the 1880s that these dry hills could produce wheat 
effectively only on a summer fallow basis. Each field is tilled only 
every other year, being allowed to lie fallow after being cultivated in 
the alternate years. This builds up both moisture and nitrogen content 
and reduces weeds (but aggravates wind and water erosion) . 

Agricultural output is shown in Table II. 

Traditionally, from the 1880s the county has produced wheat — soft 
white winter wheat, sown in the late fall, harvested in midsummer. The 
wheat moves almost entirely to Portland for export to the Far East (Japan, 
India, etc.). This type of wheat is used primarily for cracker and pastry 
flour, and, in the Far East, for noodles. At one time considerable hay 
was grown, mostly to feed horses, and some is still produced. A major 
change was the sharp increase in production of barley between 1950 and 
1970. But this change was a product primarily of Federal crop allocation 
programs, and as noted later, the trend has reversed. Much of the barley 
goes to the Willamette valley and to California for livestock feed, and 
some is exported. Total agricultural acreage has barely changed at all 
over the years; from 1950 to 1970 the acreage of wheat fell and that of barley 



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-14- 



rose, but wheat output continued to rise up to I960, and then fell. The 
increasing total output of grain is attributed to improved varieties (about 
half) and to Increased use of fertilizer and weed control techniques, and 
better timing of planting and harvesting, with greater mechanization. The 
wheat yields per acre over the years are shown in Table III, but these 
figures are somewhat misleading because of intra-county differences. The 
yield currently varies from 60 or more in a few places in the north in the Wasco 
area to 10 in a few areas south of Kent, but 36 is typical of the principal 
areas . 

While output value of crops has risen, the number of farms has continued 
to fall; the total has fallen from 545 in 1900 to 209 in 1970. Thus the 
average size has risen; the data show an average of 2,650 acres, including 
range land, but 1,500 is a more typical figure for crop land. Only half of 
the land is farmed each year, of course. There is a substantial amount of 
absentee ownership, some farms being operated by owners of adjacent farms, 
some by strictly tenant farmers. A peculiarity of the farms of Sherman County 
is that the farmhouses are almost never visible from the roads; the latter 
follow the ridges, the. farmhouses built in hollows to avoid the winds and 

be close to water. 

The decline in the number of farms and mechanization of agriculture 

have of course resulted in decline in population of the county; the 1970 

population, 2,139, is just half of that of 1910 — 4,242. The effect of the 

smaller farm population on the towns has been little, short of disastrous. 

The population figures for the towns and for the county are given below in 

Table IV; Shaniko is included although it is in Wasco County. 



TABLE III 
YIELD PER BUSHEL, WHEAT, SHERMAN COUNTY, SELECTED YEARS 



Year 



1926 


19.6 


1936 


18.3 


1946 


26.6 


1956 


32.6 


1964 


35.8 



SOURCE: I. C. C. FD 23761 



TABLE IV 



POPULATION, SHERMAN COUNTY, 1890-1970 



Population 



Year 



Mcro 



Wasco 



Grass Valley Kent 



Sherman 
County 



Shaniko 



1890 


na 


na 


1900 


335 


322 


1910 


378 


386 


1920 


418 


701 


1930 


352 


400 


1935 






1940 


309 


303 


1945 






1950 


359 


305 


1955 






1960 


327 


348 


1964 


339 


57 7 


1970 


290 


412 



na 

na 

342 

317 

208 

204 

195 

234 
216 
153 



na 


1,792 


15 


3,477 


125 


4,242 


161 


3,826 


94 


2,978 



94 2,321 



125 2,271 



65 



50 



,446 



2,139 







495 

124 

100 

55 

61 

39 



SOURCE: U. S. Census Volumes 



-15- 



Wasco has always been the largest town, but had fallen to 400 — 

compared to a peak of 700. A temporary increase in the late sixties 

resulted from the construction of the John Day dam on the Columbia. Moro, 

the county seat, is now down to 290— and much of this population is due 

to its status as county seat. 

The Elevators and the Handling of Grain 

As of 1964, the grain elevators in the county, all cooperatives, were 

as follows: 

Sherman County Grain Growers Association, with headquarters in Wasco: 

Two elevators, plus those at Biggs and Rufus on the UP main 

line along the Columbia: 

Capacity 

Wasco 685,000 bu. 

Klondike 876,000 

Moro Grain Growers Association, headquarters in Moro: 

Hay Canyon 1,001,000 

DeMoss 373,000 

Moro 680,000 

Erakine 150,000 

Grass Valley Grain Growers Association, headquarters in Grass Valley: 

Grass Valley 1,380,000 
Bourbon 200,000 
Kent 792,000 

Eakin Cooperative: 114,000 

Total, on rail line 6,251,000 

Shaniko 358,000 

Total 6,609,000 

SOURCE: I. C. C. FD 23761 



-16- 



There were a total of 11 elevators and 33 grain warehouses (including 
Shaniko , f^ora which as of 1964 gra a was trucked to Fant for shipment). 
The warehouses were in part carryovers from the earlier days of sacked 
grain, but a number were, still in use. They were located alongside the 
elevators, plus additional ones in Nish and. Wilcox, which did not have 
elevators. The estimated investment in the elevators was $3,115,000. 
Some were modern poured concrete elevators; others, rectangular buildings. 

The wheat was virtually all shipped to Portland for export. The 
elevators shipped wheat exclusively by rail — as they had since the line was 
built. Not all of the grain moved out of the county by rail, however: 

1. A limited amount was fed to livestock locally. 

2. A portion was trucked at harvest time or out of farm storage to 
The Dalles for shipment by water to Portland. The farm storage capacity 
in Sherman Count:/ was about one million bushels. 

3. A portion of the barley was trucked to the Willamette, valley, Central 
Oregon, or California for livestock feed. 

For the crop years 1962-63 and 1963-64, and the rive-year average, 
the transport pattern for wheat and barley combined was as follows: 









Output, 
Carloads 


Rail Shipments 

from 

the County 


% by 
Rail 


1962-63 






2,270 


l s 652 


72 


1963-64 






2,365 


1,833 


7S 


1959-64 


aver. 


age 


2,195 


1,796 


82 



SOURCE: I. C. C. FD 23761 



-17- 



While the increase in barley production had resulted in some relative 
3hift to trucks, there had been no l ignif leant diversion of wheat to 
trucks or decline in wheat output; the predictions of 1942 of increased 
truck transport had not been realized. The number of cars for two periods 
are listed below: figures for tne intermediate years are not available; 





Carloads of 


Years 


Grain Shipped 


1937 


1,800 


1938 


1,230 


1939 


1 } 380 


1940 


1,030 


1941 


904 


1959 


1,803 


1960 


2,235 


1961 


1,895 


1962 


1,327 


1963 


2,260 


1964, 


1,341 



SOURCE: I. C. C. Finance Docket 23761. The figures for years prior to 
1940 involve a slight degree of estimation. 



-17a- 



Thus there was no visible trend; the highest year was 1963. The 
year-to-year fluctuation reflected jhe variations in crop yield, the 
timing of the shipments in terms of the calendar year, and, probably, 
the relative rail and barge rates, which changed during the period. 
The increased production of barley, much of which was trucked, was offset 
by the increasing yield of wheat acreage. 



During the 1960s the railroads in the northwest made several 
efforts to reduce rates to compete more effectively with barges. 
In 1963 ( Grain from Idaho „ Oregon and Washington to Ports in 
Oregon and Washington , 319 ICC 534), the I.C.C. denied most of the 
requests on the grounds that the proposed rail rates were less than 
fully distributed cost while barges were the low cost carriers. 
In 1966 (325 ICC 358), the I.C.C. approved the lower rates "on the 
basis that they would not destroy barge competition. 



-18- 



Th e country elevators on the line do not buy the grain; they simply 
store for tae farmer and assist him in the sale. The sale is made to 
the exporters in Portlands technically, directly by the farmer. The same 
is true of grain trucked to the Interior elevator in The Dalles. The price 
received by the farmer is the Portland export price less transport and 
handling costs. Since these elevators are cooperatives , their net earnings 
are distributed among the farmers on a patronage basis, 

As would be expected from the elevator capacity rather than from popula- 
tion, Grass Valley was the largest shipping point on the line } followed 
closely (for bushels) by Hay Canyon, which has no population at all, with 
a substantial distribution throughout t 

TABLE VI 
SHIPMENTS FROM ELEVATORS 



Shipping 


Point 


Miles from 
9.7 


Average Shipments, 

Millions of bushels, 

1955-64 


Average Number 
of Cars Shipped 
1959-63 


Cars 

shirv- 

1963 


Wasco 




32 . 6 








301 


369 


Klondike 




14.2 




29.2 








208 


290 


Hay Canyon 


19.0 




33.1 








283 


325 


DeMoss 




23.9 




9.S 








90 


96 


Moro 




27.0 




24 . 2 








243 


303 


Erskine 




31.1 




5.6 








50 


50 


Grass Valley 


38.5 




34.7 








357 


489 


Eakin 




43.0 




4.1 








39 


58 


Bourbon 




45.8 




5.1 








52 


52 


Kent 




52.5 




22.8 








245 


297 



SOURCE: I. C. C. Finance Docket 23761. 



"Cargill does buy grain in The Dalles 



-19- 



Inbound Traf fic 

Primarily and to an increasing extent over the years, the traffic on the 
line was outbound grain. There was no outtreight but grain — in contrast to 
the picture as late as 1941, when 73 cars of livestock were taken, out; this 
traffic had gone entirely to trucks. 

The total number of inbound loaded cars had been as follows: 

1941 213 



1959 


84 


1960 


87 


1961 


37 


1962 


34 


1963 


43 


1964 


36 



A breakdown by major category is available 1959-64, as presented in 
Table VII: 

TABLE VII 

INBOUND TRAFFIC, 1939-64 
CARLOADS 

1959 1960 1961 1962 1963 1964 



Agricultural implements 


21 


12 


10 


6 


10 


7 


Feed 


4 


8 


8 


8 


14 


11 


Dry fertilizer 


1 


2 














Anhydrous ammonia (fertilizer) 


41 


39 


7 


8 


7 


8 


Petroleum products 


7 


8 


Q 


7 


8 


6 


Other 


10 


18 


3 


5 


4 


4 


Total 


84 


87 


37 


34 


43 


36 



SOURCE: I. C. C, FD 23761 



-20- 



The sharp decline from 1941 had primarily been in the handling of petroleum; 
in 1941 all gasoline and diesel fuex came in by rail; in the 1960s, only a 
few cars of diesel fuel for Union Oil at Grass Valley. The big drop after 
1960, when the traffic fell in half, was the loss to trucks of the handling 
of anhydrous ammonia, the principal fertilizer used. This is trucked from 
Portland or Pasco. The loss in petroleum traffic was a national phenomenon 
as the petroleum industry shifted from rail to truck partly 
because of the desire to deliver directly to service stations instead of 
through bulk plants. The extreme unbalance in traffic (characteristic 
of most branch lines) resulted in the need to bring in large numbers of 
empty boxcars. The wheat was all handled in boxcars, typically with 60 ton 
loading; the use of 100 ton hopper cars had not yet begun on any scale in 
1964. 

Total Traffic 

The volume of traffic, calculated in terms of the major points, is 
slightly short of the volume prescribed in the 1974 D, 0. T. report as 
necessary for a line to be included in the proposed CONRAIL system, but 
well above the minimum volume regarded by D. 0. T. as necessary if a line, 
is to be retained on a subsidy basis. The 1959-64 average was barely 
above the I.C.C. *a 34 car rule; traffic below this figure is presumptive 
evidence for abandonment. 

Table VIII shows ton mileage per mile of line for each segment; 
the overall average 1959-63 is 61,219 ton miles per mile of line. 



in 1973. 



1 
The shift occurred on traffic to Prineville in central Oregon only 



TABU VIII 



TON MILES PER MILE OF LINE, 1959-63 AVERAGE AND 1963 



Miles, 
Segment 



Kent - Bourbon 

Bourbon - Eakin 

Eakin - Grass Valley 

Grass Valley - Erskine 

Erskine - Moro 

Moro - DeMoss 

DeMoss - Kay Canyon 

Hay Canyon ~ Klondike 

Klondike - Wasco 

Wasco - Biggs 

Total ton miles 

Average ton miles per 
mile of line 



Ton Miles per Mile 



1959-63 

Average 



1963 



6.7 


14,700 


17,820 


2.8 


17,820 


20,940 


4.5 


20,160 


24,420 


7.4 


43,080 


54,900 


4.1 


46,080 


57,900 


_* . i_ 


6.1,560 


76,800 


4.9 


66,960 


82,560 


4.8 


83,940 


102,060 


4.5 


96,420 


119,460 


9.7 


115,380 


142,380 




3,249,620 


4,011,130 



S "J * 



1,219 



75.683 



SOURCE; Calculated from tonnage data 



■21- 



The Line 

A more detailed statement of tae nature of the l^.ne is required as 
preliminary to discussion of the damage done to it in the 1964 flood. As 
of 1964, trie line was 52,5 miles in length, with used 90 pound rail 
laid in 1919-23 and in 1951 (on the southern portion, to replace the 56 
pound rail), and a small amount of 130 pound rail. The line was unballasted 
and only partially tie plated. The first portion of the line, from the 
junction at Biggs to a siding called Thornberry, was by far the most diffi- 
cult, the line coming up the side of Spanish Hollow on a 3.47 percent grade. 
The canyon is narrow and the. grade was cut into the bank 15 to 20 feet 
above water level. (The creek has little or no water most of the year.) 
From Thornberry the grade and curvature was reduced as the hollow widened. 
The track bisected the town of Wasco, the station located on the main 
street. Then, instead of heading southwest, toward Moro, as does the highway, 
the line continued southeast to make a great loop; the rail mileage Wasco - 
Moro was 17.2 miles, the highway milt-age 9. The track climbed steadily on 
a 2.28 percent ruling grade thro -en country to Klondike , where 

a major elevator was located; Klondike once had a store and a population of 
7; there is now only a house. The climb continued to Sandon: and then followed 
a two percent down grade —the ruling grade against northbound traffic --into 
the mouth of Hay Canyon where the latter is joined by Grass Valley canyon. 
On a spur off the line down into the canyon was located the big Kay Canyon 



1 

The line was routed via Hay Canyon, despite the grade against the 

loaded traffic, in part because of efforts of Hay Canyon area farmer? to 
obtain service. The Hay Canyon area was regarded as one of the best wheat 
areas in the county in the nineties. Some swing to the east was required 
to avoid the ridge above Wasco. 



-22 



elevator. Then the line began to climb again, following; the narrow canyon 

1 
of Grass Valley Creek on a two per. ait grade to DeMos • Springs and Mora, 

entering the latter on the east side of the business district. The line 

then followed Barnum Creek southwest past the elevator at Erskine. This was the 

end of the canyon running; from thence on southward the line followed the 

undulating hills, with a 2.2 percent ruling grade to Grass Valley, 1.68 on 

to Kent. In summary, there were 19 miles of one to two percent ascending 

grade (southbound), nine miles from two to three percent, four over three (all in 

Spanish Hollow). There were four miles of descending grade southbound between 

one and two percent, 2? miles from two to three percent . The remaining 

13 miles had grade under one percent, as the line ran along the ridges of 

the hills above Moro. There were 45 bridges, one a 67 foot girder bridge, 

most short trestles. There were 165 curves, over three per mile, the 

sharpest 16 degress. The elevations of the towns were as follows: 



Biggs 


170 feet 


Wasco 


1,266 


Klondike 


1,547 


Hay Canyon 


1 , 2SS 


DeMos s 


1,567 


Moro 


1,798 


Grass Valley 


2,271 


Kent 


2,797 



Shaniko, the original terminal, was at 3,330 feet. 

Despite the lack of ballast, the line in general had been maintained 
in good condition for the volume of traffic, as is typical of Union Pacific 
lines. Good drainage minimized maintenance problems. 



DeMoss was once a town with houses, stores, churches, etc. 

Today there is no trace of the town— only the elevator and a roadside park, 



-23- 



The Earnings 

The Union Pacific's calculation of earnings for 1963 and 1964 
were as follows: 

Revenue 1963 1964 

Freight revenue arising from 

the line: 
traffic originating on 

the line $ 387,546 $ 226,125 
traffic terminating on 

the line 18,550 12,507 

Other revenue 1,369 1,530 

Total revenue 407,465 240,162 



81,920 


60,330 


4,648 


2,998 


49,934 


34,929 



Expenses 

On the branch: 

maintenance of way 
maintenance of equipment 
transportation 

Total operating expenses 136,502 98,257 

Other expenses 

Taxes 

Equipment rental 

Miscellaneous 

Total other expenses 

Total expenses on the branch 

Expenses of handling on the 
main line the traffic originating 
or terminating 
on the branch: 

using UP operating ratio 

using ICC 50% rule 

Total expenses, using 
UP operating ratio 
ICC 50% rule 

Net Income , 

Using UP operating ratio 
Using ICC 50% rule 



Source: I.C.C. FD 23761 



16,587 


16,655 


7,440 


4,827 


4,855 


4,710 


28,892 


26,182 


65,394 


124,449 



210,266 


130,913 


165,091 


97,782 


375,660 


255,262 


330,490 


222,231 


31,805 


15,100 def. 


76,975 


17,931 



-23a- 



The expenses and net profit or loss figures were calculated in two ways, the first 
using the Union Pacific *s own operating ratio to determine the expenses of 
handling the traffic off the branch, the second the l.C.C.'s 50 percent figure; 
that is, one half of the revenue is assumed to be required to cover the out- 
of-pocket expenses of handling the traffic off of the branch. The net earnings 
with the two approaches, for the years 1959-1964, are indicated below: 

Net, Union Pacific 
Year Operating Ratio Basis Net r I.C.C . 50% Rule 

1959 + 11,379 + 50,390 

1960 + 86,370 +134,330 

1961 - 5,749 + 31,578 

1962 - 47,775 - 20,915 

1963 + 31,805 + 76,975 

1964 - 15,100 + 17,931 

SOURCE: I. C. C. FD 23761 



-24- 

On the T. C. C. formula, the branch was doing remarkably well — compared 
to most; even on the UP's basis the overall record was not bad. These 
figures, oi course, do not include return on investment. Cost of operation 
on the line was 4.1 cents (1963) per ton mile. 

Train Op erations 

With the elimination of the line south of Kent and the dieselization, 
it became possible to make the run i:o Kent and back within 16 hours, and 
the overnight stopover was eliminated. In the 1960s the train was operated 
on call only, rather than on schedule — that is, when traffic warranted. 
In practice this meant an average of nearly two trains a week; in 1963, 95 
trains were operated, of which 86 went south of Moro; in 1964, with lighter 
traffic, 70 trains, of which 61 went beyond Moro. Under a peculiar feature 
of the union agreement, Moro was designated as a terminal. If a train went 
south of Moro, this was an additional trip. Therefore a round trip from 
The Dalles to Kent involved two days pay (but of course required nearly 
16 hours as a rule). A six man crew was utilized. 

Of these trains, in 1963, 59 utilized two engines and 36, one; in 
1964 the figures were 37 and 33, Tne diesels used on the lines were GP 7s 
or 9s, or F 7s or 9s. The 9s could pull 525 tons, or 21 empties, up the 
ruling grade in Spanish Hollow; the 7s, 15. The 9s could bring I 3 000 gross 
tons or 11 loaded cars up the two percent grade from Hay Canyon to Sandon. 
Thus 22 cars were the most that could be brought out from points south of 
Klondike. In 1964, agents were still being employed at Wasco, Moro and 
Grass Valley; in that year all except the Moro agency were closed. 

The Rate S t ructure 

The rate structure was basically different from that affecting most 
traffic on branch lines, a feature significant for the effects of abandonment 



-25- 



The rates varied with the distance from the Columbia 



Biggs, on the main line 

Wasco 

Klond ike 

Hay Canyon, DeMoss, Moro 

Erskine, Grass Valley 

Eakin, Bourbon, Kent 



Cents per 
cwt 


Cent 

Ton 

2.2 


:s per 
Mile 






L3 


2.3 




14 


2.4 




14i 


2.2 


(Moro) 


15* 


2,2 


(Grass Valley) 


16£ 


2.1 


(Kent) 



Miles from 

_ Portland 

104 
14 

18 
122; 128; 131 

>; 143 
147; 150; 157 
SOURCE: I. C. C. FD 23761 
Thus rates per ton mile were approximately the same, to all points, 

including Biggs on the main line. These are relatively low rates Cor the 

distances involved; as noted, in the 1920s the rates were twice as high. 

Incoming freight coming over longer distances was subject to blanket rates; 

the rate to points on the branch were the same as to main line points in 

the area. 

The Abandonment Decision 

The written and oral testimony on the abandonment application were 
very detailed and contain extensive information on the line. 

The Union Pacific built Its case around the flood damage and the 
amount of money required to rebuild the line. 

The primary damage was in two sections: 

1. Milepost (the junction at Biggs) to milepost 4.75 near Thornberry — 
the section in Spanish Hollow. Most of this line had been torn out completely- 
rails, ties, roadbed, bridges, and grade were gone; there was hardly any 
trace of the railroad at all. 

2. Milepost 19 at Hay Canyon to milepost 26 near Moro. In this section 
Grass Valley Creek had done similar damage, taking out. the grade as well as 



-26- 



track and bridges. The Union Pacific's chief engineer stated that this was 
the worst damage he had ever seen o„ a Union Pacific line. 

In total 81 miles of line were destroyed, and 24 of the 26 bridges on 
these two segments-. Some damage was done to other portions, but this was 
relatively minor. Tae Union Pacific made its own estimate of the cost to 
rebuild and had a separate estimate made by an engineering firm. The 
Union Pacific's figure was $1,615,000 as a minimum to rebuild at the same 
elevation as before. Of this, the Spanish Hollow section would account for 
$930,000. The engineering firm's estimate was $2,294,000. But to rebuild 
on the old grade level was regarded as folly because of the danger of 
repetition of the flood. The problem in Spanish Hollow has been aggravated 
by the rebuilding of Highway 97 , which had reduced the space available for 
the creek. To build on a ten foot higher grade would impair the clearances 
of the highway overpasses; to rebuild the highway bridges would cost anoth 
$1.5 million. To make matters worse, immediately following the flood, 
U. S. 97 was rebuilt in such a way as to encroach still further on the 
canyon and even the railroad right of way. 

The Union Pacific argued that the potential earnings from the line did 
not justify this amount of outlay, and given the nature of the area, there 
was no possibility of increase in traffic. On the I. C. C. formula the 
earnings had averaged $48,000 per year over the preceding five years; the 
length of time necessary to recover the investment, 22 years, was regard^ 
as excessively long. The railroad argued, further, that the traffic could 
be handled adequately by truck—and used as evidence the fact that the 1965 



A case could be made that the state could appropriately bear this 
cost, since its action in widening the road grade had aggravated the damage 
to the railroad. 



-27- 



crop had been handled successfully — though admittedly the crop was less 

than normal. The Union Pacific was of course also aware of the 

growing importance of farm storage, now estimated at one million bushels 

capacity in the county, and the tendency to truck from farm storage directly 

to The Dalles for water transport . While the tonnage, thus moved had not 

seriously affected traffic on the line thus far, the potential was great. 

The gain to the Union Pacific from retention of the line was of course 

less than it might otherwise have been because of the relatively short 

main line haul and the relatively low rates. The long period the UP 

took to come to the conclusion not to rebuild probably reflected differences 

of opinion among various persons in the company involved in the decision. 

The prctestants included the grain cooperat Lfic Northwest 

Grain and Grain Products Association, an organization of grain cooperatives; 
the U. S. Department of Agriculture; the Oregon Public Utilities Commission; 
local groups; and, as always, the labor unions. 

However y was less united than in 1942. The management of the 

Moro Cooperative had long believed that trucking of grain to the Columbia 
and thence shipment by water offered advantages; the manager was a director 
of North Pacific Gi ain Growers Association, which was encouraging water 
transport. Accordingly the Moro Cooperative, while opposing the abandonment 
did not fully join in gbt, which was, reported, primarily a 
Wasco effort. The task was also more difficult; there was no war omergencyj 
trucks were more readily available; and there was some feeling that t 
task was hopeless, given the vashout. 



•27a- 



The basic arguments centered around several points: 

1. T^e cooperatives had continued to use ra.il sarvice almost 
exclusively; the traffic -eased over the years. 

2. The line was noL unprofitable by the Union Pacific's own figures, 
the investment would be recovered in time, and the railroad had entirely 
adequate funds with which to rebuild . 

3. The costs of rebuilding to the old standards were overstated. 

4. Substantial injury would result to the cooperatives and the 
farmers of the area in several ways: 

a. Cost of transport. 

(1) The costs of handling grain would be increased; the combined truck 
and rail rate would be higher than the old rail rate even with the rate 



-23- 



concessions made by the Union Pacific. The combined rail actor rates as 
compared With the old rail rates £ ates woul as folic 



• 




Cents per Cvt 


Shipping Point 


All Rail Rate, 


1964 


Rail-Motor Combined Rate 



Wasco 13 17 

Klondike 14 17 i 

Hay Creek 144- 18 

Moro 14i 18i 

Grass Valley 15* 21 

Kent 16* 23 



The total cost additional pe ir was estimated no be $91,725. 
This analysis assumed that: the traffic would move truck- rail, whereas the 
truck-barge rate was lower, 

(2) Additional costs of rehandiing at the Columbia, estimated at 
$75,41 

(3) The elevators would require readjustments to facilitate shipping 
of grain out by truck rather than rail on other than a temporary basis. 
One estimate of cost was $162,137, 

(4) New facilities would be ed on the Columbia River for tran- 
shipment by water or rail, estimated cost of $94,000. 

(5) Surfacing of roads to elevators not having such roads, $105,000. 
Thus a total capital outlay of $361,137 would be required, and additional 

annual costs of $167,136. 

b. There would be incidental disadvantages to the farmers and the 
cooperatives, centered around the loss of "orderly marketing'." 

(1) The elevators might lose their certification 



(2) Payment to the farmers would be delayed, since drafts could not be 
drawn on the grain until it was loaded into railway cars. 

(3) There would be less certainty about rates and transport costs; 
no longer would there be a posted rail price. 

(4) Concern was expressed about the availability of motor transport 
as required for immediate delivery of grain sold in large volume., and 
year-round availability. Some elevators would occasionally move as much 
as ten cars in one day. 

(5) Competition between rail and motor transport for moving the grain 
would be lost. 

(6) Farm storage would increase, lessening the need f '~>r the country 
elevators. 

(7) Some inconvenience would occur in obtaining I s, which 
were based on on-rail prices. 

The net effect would be loss in convenience of shipping; loss in the 
value of the elevators, which would play a less important role in 
handling; and reduced net return to the farmer-; due to higher transport 
costs. 

One is impressed by the high quality ciefs and the testimony, 
with a minimum of the usual irrelevant nonsense that, is o f resented in 

such cases. 

The Effects of Abandon men t 1_ Gr ain 

As soon as it became apparent that the line could not be back in service 
for the year of 1965, the elevators commenced to move the grain by truck 
to the Columbia. The Union Pacific, in an effort to lessen the problems 



-30- 



of the shippers and the opposition to abandonment lowered the rate f rorc 
Biggs on motor-rail shipments from xl cents per 100 pounds to 8£ cents. But 
much of the grain went by barge on the Columbia. Even so the total 
costs were higher at the moment; for about one million bushels of C.C.C. grain, 
the additional costs resulting from trucking were estimated to be $24,702, 
or 2.3 cents per bushel. The Union Pacific then lowered the rate again, 
to 7 cents on combined shipments and about 700 cars moved out by rail, 
about one- third of the figure previously moving. 

Once it became evident that the line would not be rebuilt, more 
permanent stex>s were taken : 

Moro and Grass Valley: MIDCO; Early in 1966, Moro Grain Growers 
Association built a new elevator on the Columbia River at Biggs (it had no 
elevator at this point previously), to permit barge loading and trucked 
all grain from its country elevators to this river elevator for shipment 
by barge to Portland. e elevator has a capacity of only 220,000 bushels; 
the wheat is stored in the country elevators and then moved to the river 
when particular amounts are accumulate for a barge load. A barge 
holds 50,000 bushels, the eqt boxcars* and can be loaded in 

11 hours. The wheat is all handle.': in bulk and thus loaded and unloaded 
mechanically. 

The Grass Valley Cooperative at first built a temporary rail loading 
facility at Biggs and trucked to that point. Shortly it began to ship 
through the Moro facility. On June 1, 197 3, the Moro and Grass Valley 
cooperatives were merged to form MIDCO (Mid Columbia) Grain Growers Association, 
with headquarters in Moro. Currently MIDCO has one truck and trailer of its 
own, holding 26 tons, and contracts for the use of two additional trucks 
and trailers as needed to meet peak demands; it cannot keep more than one 
truck busy at all times. 






MIDCO's own truck e about 10 percent less than the contract 
rates. The costs (1974) are shown .n Table IX; 

COSTS OF SHIPPING GRAIN TO PORTLAND FROM MIDCO ELEVATORS, 1974 

RATE PER 100 POUNDS 



Origin 


Contract 
Truck Rate 

9 . 25 


Cc 
Own Truck 
(approx.) 


Barge Rate 
Biggs-Portland 


Total.. 
Rate 

17.45 


1964 

All Rail 

Rate 


Kent 


8.3 






8.2 


1 6 . 5 


CrasiJ Valley 


6.5 








8.2 


.,1 


15.5 


Moro 


4.8 


.3 






8.2 


13.0 


14.5 


Hay Canyon 


4.3 


3.6 






8.2 


12.5 


14.5 



With Contract trucks 



SOURCE: Provided by MIDCO Grain Growers Association 

Thus, except for Kent, the tot \1 cost of shipment is less now by 
truck-water than it was by rail. For Moro, for example, in terms of bushels, 
the truck-barge figure is 7.8 cents; truck and rail, 9.2 cents; the old all 
rail rate, 8.7 cents. Only for Kent, with its relatively long trucking 
haul, is the overall cost higher. The trucking costs per ton mile are as 
follows: Kent, 3.6; Grass Valley, 3.3; Moro, 3.6; Kay Canyon, 4.5, using 
the -rail mileage. Using the road mileage (which is shorter), the figures 
are: Kent, 4.6; Grass Valley, -4.8; Moro, 5.6; Kay Canyon, 5.4. These truck 
costs are higher than the rail rate differentials under the all rail rates; 



•32- 



it is the lower barge rate that makes the combined figure lower. The 
cooperative did add some investment, at the river elevator, in other 
elevators, and for the purchase of a truck, to offset this dif ferential 
in part. 

In summary, then, essentially the abandonment of the line prodded Moro Grain 
Growers into doing what it could have done anyway and might have done ultimately. 
For an outlay of perhaps $300,000 in total — or an annual cos.: of perhaps 
$18,000 at 1964 interest rates — the effect was to save, on all traffic 
except from Kent, a considerable sum of money — perh>- i the average 1/2 cent 
per bushel, on 3 million bushels, or $150,000 annually. 

Sherman Cooperative: The Sherman Cooperative followed quite a differ- 
ent policy. Sherman already owned an elevator at Biggs m the river, which 
handled the grain from its members relatively close to the river. This 
elevator had once been located on the river itself; when the Jo y dam 
was built, the Sherman directors thought that there was danger of the elevator 
being flooded, so the Army Corps of Engineers moved it inland across the 
Union Pacific tracks, leaving it only r ad truck access. Interstate 80 
is now also between it and the river. : : ps ei f by rail, 

bringing the wheat f ls Wasco ai :ce elevators by truck. Its 
truck and rail costs are as foJ 



Origin 


Con t r a c t True k 
per 100 lbs. 


Rate, 


Ra 
Rate 

11 

LI 


Combined 
te 


64 All 

Rail Rate 


Wasco 
Klondike 


3.3 

4.2 




14.3 
15.2 


13 

1- 



The truck costs are somewhat higher than the rail costs per ton mile 
of operating the branch, exclusive of return on investment. 



-33- 



In terms of bushels: the rail rate to Portland is 6.6 cents; the 
truck rate, 2 cents from Wasco, 2£ cents from Klondike. The comparison with 
the previous all rail rate is somewhat misleading because of the increases 
in rail rates that have occurred generally since 1964; with the. rate 
reductions made by the Union Pacific in 1965 (since offset by general rate 
increases) the cost of the combined truck-rail movement was not greater than- 
the previous all rail movement. The net result of using rail, however, is 
that a somewhat greater cost is being incurred at present than the truck- 
water cost; but the cooperative estimates that the differential over 
water, all elements considered, is not over i cent a bushel. This is not 
regarded as serious and the Sherman Cooperative is satisfied with the 
present transport system. The Cooperative does not own its own trucks 
but contracts for this work. When grain is being shipped from Biggs and Rufus, 
five miles east, the cars are dropped off in the early morning by the local freigh;. 
that works the Condon branch and picked up loaded in the late afternoon. All 
shipments now go in hopper cars, C3 and C4, handling 4,000 bushels. These 
eliminate the need for grain doors and the leakage through holes. The 
Sherman attitude is that if there was access to water the cooperative would 
ship by both rail and barge, but the gains from shifting to barge do not 
warrant the investment necessary to do so. 

Thus, as the situation now stands, the grain handling in Sherman County 
is roughly as follows: 

1. The largest portion of grain, that coming from MIDCO, is trucked 
to Biggs and moves to Portland by water. 



-34- 



2. A second segment, perhaps 750 cars a year on the average, is 
trucked to Biggs and Rufus and moved by rail to Portland. 

3. A third segment, perhaps as much as one million bushels per year, 
is trucked to The Dalles for direct water shipment, through Interior 
Elevators, which leases the large river elevators from the Port of 

The Dalles, or through Cargill. Some of this grain comes down at harvest 
in farm trucks (perhaps 5 percent). Most of it is hauled out of farm 
storage by commercial truckers. Interior also receives grain by truck 
from farm storage in central Oregon, from the portion of Washington directly 
north of the Columbia, and by truck and rail from eastern Oregon and 
Washington and Idaho, and by rail from Montana and the Dakotas. 

4. Some barley is trucked to the Willamette valley for livestock 
feed and seme to California at low back haul rates; it cannot move by truck 
in competition with rail at regular truck costs or rates. 

It should be noted that little or no grain is trucked to Portland tor export or 
for flour milling. There are two reasons: the much higher cost of trucking 
than the cost by barge and the existing rail rates, combined with the 
unsuitability of handling wheat as a back haul; and the very limited 
facilities for dumping of trucked wheat for export at Portland. The flour 
mills in general do not handle grain or flour by truck in the northwest; the grain 
comes in by rail, is milled, and goes out again by rail on transit rates. 

The net effect, therefore, of abandonment on the major crop of the area 
was in fact negligible and in a way was beneficial by prodding Moro (now MIDCO) to 
build an elevator at the river. Grain acreage was about the same 
in 1973 as In 1960. The crop on the whole moves at rates that do nor. 
differ sharply from those that would exist if the rail line were 



-35- 



stlll in place; any differential, some favorable (Moro), some slightly 
unfavorable (Kent, and Wasco-Klondi^e) is not significant, given present 
prices for wheat. Some additional investment by Moro and a small amount 
by Sherman was required, but this also was relatively small. But the 
failure of the abandonment to have significant results for the particular 
crop was due to several special circumstances: 

1. The availability of cheap water transport, more or less equally 
suitable, for the purpose. 

2. The effect of water transport in keeping rail rates relatively low. 

3. The relatively short distance the wheat, moves — not over 150 miles — 
coupled with the nature of the railroad rate structure on the line, the 
rates rising with distance from Portland. Had s single blanket rate 
applied to the whole area, the shippers from southern Sherman County would 
have been seriously affected by having to absorb the trucking costs. 

4. The cheapness of transferring grain from truck to barge or rail 
car mechanically. 

Had these conditions not been present, the economic injury to the area 
in the form of higher transport costs would have been substantial. 

Evidence of lack of effect is provided in Table II; agricultural 
acreage has risen since the abandonment. The recent shift back to wheat from 
barley reflects the end of allotments and relative cost-price ratios. 

The fears of the shippers about the nonavailability of trucks, the. 
effects on the roads, and the loss of "orderly marketing" proved to be 
illusory. Admittedly it was simpler to fill the grain cars at the elevators. 
But the cooperatives have been successful in moving the grain to the river 



-36- 



by truck without trouble; grain is moved first from elevators such as Klondike 
before the rural roads are affected by the weather. But an additional outlay 
of $184,000 proved to be necessary on the county roads. 1 Additional road 
maintenance cost is hard to estimate. The major highway, U.S. 97, is built to 
high standards and carries long distance trucking. It is nor congested ana 
negative externalities from trucking are minor, limited to the loss of time 
to motorists who get caught behind grain trucks on the curves. 

If, however, the export markets were lost and the wheat began to move 
east by rail, the loss of the line would prove to be more serious. Even so, 
the grain can now be trucked to the UP main line at little or no greater 
real cost than the previous rail movement — but the shippers would lose the 
advantage of blanket rates which would likely apply to all points in central 
Oregon, as do the rates on lumber. 

Grain from Maupin and Madras elevators, which take in grain from southern Wasco 

County and a limited amount from Sherman County, moves by rail out of the 
elevators to Portland, as a cost roughly the same as the combined truck- 
barge rate would be. It could move equally well either way. A substantial 
amount of grain from farm storage in the Madras-Maupin area is trucked to 
The Dalles for direct shipment by water, rather than moving through the 
elevators and by rail. Wheat from the Condon area directly east, east of the 
John Day River, moves primarily by rail but some from farm storage into 
Arlington by truck and some through the MIDCO elevator at Biggs. Thus, if 
the Grass Valley line were still in place, most of the Sherman County grain 
would likely still move by rail; there is little difference In cost between 
the two methods. 



Letter from Sherman County Road Department, July 16, 1974. 



-37- 



The Effects: Inbound Traffic 

As noted, the inbound traffic had dwindled to the point at which it 
constituted only about two percent of total traffic Gasoline had already 
transferred to trucks, and the remaining diesei fuel traffic of 
Union Oil was easily transferred* In more recent years this traffic has 
been shifted even at points still having rail service in central Oregon 
(e.g., Prineville) . The same happened with the fertilizer traffic. The 
inbound feed traffic was affected to some extent. For example, MIDCO 
averages about Is cars a month from the Ralston Purina mill in Spokane. 
This has to be trucked from the Columbia River rail points with, in the 
past, somewhat higher total cost; larger trucks now make it possible to 
truck directly from Spokane at less than the old rail rates. But on the 
whole, consequences for inbound traffic were nominal; the total coming in 
was small anyway, and the major items had shifted to trucks — as would not 
have occurred with fertilizer if it had been, dry fertilizer blended in the 
county. 

Unlike in many abandonment cases, there was no complaint of poor service 

causing loss of traffic; shippers were well satisfied with the Union 

Pacific's service. 

Incidental Adverse Effects on the Area 

It is difficult to discover significant adverse effects of the 

abandonment. Somewhat fewer men are employed loading freight cars—but this 

change would have occurred anyway as the traffic shifted to hopper cars, 

as it would have in the late sixties. The loss of other railroad personnel — 

four agents, the nine section workers and their families, added to the 



-37a- 



decline in population and buying in the area; these apparently wore <• 
offset by ^n equivalent increase ir the trucking industry. There was, 
of course, some increase in employment in trucking, purchases by trucking 
employees who live in the county, and purchases of motor fuel and supplies. 
The jurisdiction lost about $9,000 in taxes (but other Oregon jarisdictions 
received larger amounts; the total tax bill of the Union Pacific was undoubtedly 
not reduced by this amount, given the methods of valuing railroad property for 
tax purposes in Oregon) . The newspaper lost the advertising that the 
Union Pacific does in the areas it serves — and the crew no longer ate lunch 
in the county. There has been, probably, some adverse psychological effect; 
the loss of the railroad was one more step in the long decline of the towns 
in the county. As noted above, the towns have lost population for decades — 
and even persons most loyal to their home county can hardly call 
their towns appealing. Kent (like Shaniko) has almost achieved ghost town 
status and Grass Valley is scarcely a viable economic unit, its population 
down to less than 150. Moro and Wasco do have a few attractive homes, a 
few cafes, gas stations, small sto es, plus the elevators; Moro has a 
weekly newspaper anc a bank, which Wasco lacks. But Moro is supported 
primarily by the fact, that it is the county seat. Both towns have numerous 
boarded up store buildings, with more vacant lots than houses in many blocks. 



-38- 



The loss of the railroad, as indicated, is just one more symbol of 

1 
economic d cline and t ss :lim lates any hope ■ future industrial 

development that requires rail service. But one cannot help but feel that 

the chances of such development were slight. Some persons did have a 

certain sentimental attachment to the line — sometimes referred to as "Old 

Sage Brush Annie 5 ' — long the area's lifeline to the outside world. 

The loss of the railroad to Shaniko in 1943 was, while inevitable, 

more significant; eventually the elevator and warehouse were abandoned, the 

grain moving from the farms or farm storage either to Maupin, on the main 

railway line down the Deschutes, to Kent, or all the way to the Columbia 

by truck. for water transport, Shaniko lost its economic significance when 

the Deschutes line was built: it gradually deteriorated, and the ending of 

the rail line was the final blow. It is essenti a ghost town— in fact, 

attempts have been made by the few residents to capitalize on this as a 

tourist attraction. There are few more desolate spots in Oregon than the 

Shaniko plateau and it is bard to lure an • purpose. The old 

brick. Columbia Southern Hotel, famoi in the earlier days, sti ands, 

as do the abandoned warehouse and elevator— lot much else. 

Was the Abandonment Juscl t iable ? 

The 1942 application to abandon the entire ?£> as noted, 

prompted by considerations other than strict profit maximization — was 
clearly unwarranted, and the I. C. C. r s decision rejecting it was economically 



Ironically, Sherman County has one of the highest per capita incomes of 
the Oregon counties. The farmers do well-— but the towns do not. 



-39- 



correct. The line, by the Union Pacific's own figures, had been earning 
up until 1940, when the war interfered with export markets, an average of 
$26,000 a year, over the period 1937-39. This figure, of course, involves 
some arbitrary determination of costs of handling the branch line traffic 
on the main line. The salvage value was estimated to be $230,000; the 
eld steam locomotive at the maximum was worth $2. t >>000. Thus annual 
earnings of only $15,300 (at 6 percent) were required for the line to cover 
all of its economic costs, and the actual earnings were well in excess of 
this. But the Kent-3haniko portion was without doubt offering inadequate 
traffic to warrant continued operation, although exact figures are not 
available. The 17 miles of line served only the one elevator at Shaniko, 
which in turn served only about 25 farmers. The possibility of trucking 
to Maupin and Kent, though at some higher cost, made retention of the 
segment unwarranted, especially since Shaniko offered no future traffic 
potential. 

As of ''QSA, the situation as t the remaining line is more difficult 
to assess. 

If it is assumed that irrent picture remains unchanged, so 
that the time factor can be eliminated, the basic formula for evaluating the 
desirability of retention of a railroad line, from the standpoint of the 
railroad is as follows: 



-40- 



G = (R. + R ) - (C, + C ) 

rs d s b s 



where: G = net gain to the railway system . The line will be retained if 

G is posit iv. 
rs * 

R, = revenue arising from operations on the branch 
b 

R ■ additional revenue to the remainder of the system due to 
s 

traffic originating or terminating on the branch that will 

be lost if the branch is abandoned . 

C, = costs due to the operation of the branch that will be eliminated 
b 

if the branch is abandoned, including an interest return on 
the salvage value of the line and equipment used. 
C - costs to the system of handling the branch-created traffic 

off of the branch (costs that will be eliminated if the branch 
Is discontinued). This is difficult to ascertain; the I. C. Ca- 
uses a 50 percent rule — that half of the revenue received from 
this traffic represents out-of-pocket cost of moving it on 
the main lines. 
If this formula is ap{ results are as follows. The 

net gain for the five-year period 1959-63 v 3,000 a year before return on 
salvage value is considered. The Union Pacific's estimate of salvage value after 
costs of removal was $206,000. The two diesels on the line were worth 
perhaps $400,000; if 40 percent of this is assigned to the line, the 
figure is $160,000, and the total relevant investment $366,000. Thus return 
at six percent on the entire salvage value was $22,000. Continued operation 
was clearly warranted — prior to the flood damage. The minimum estimate of 
the cost of rebuilding was $1,615,000. This sum plus the salvage value 
of $366,000 would have provided a base of $1,918,000; at six percent, annual 



-41- 



ear nings of $119,000 would hav€ red to an actual figure 

of $48,000 Thus. G . sre figure of $7] 

rs 

Thus the necessary earnings — at 'ic's figure of 

costs and expenditures—exceed the e, Lgs of the previous years by about 
$70,000 a year. There was no expectation that evenue could, increase 
significantly. The grain traffic ban remained steady for several decades, 
apart from year-to-year fluctuations, increasing crop yield being offset by 
greater barley output (much of which was trucked) and by more trucking out 
of farm storage. It did not appear that either of these trends would be 
reversed, and there was always the danger that more would move by the 
truck-water route. Much of the inbound traffic had been lost to trucks, 
and there appeared to be no chance of increase. This traffic had never 
been significant at best. Thus, given the lack of expectations of improve- 
ments in revenue the company was clearly justified in not rebuilding, 
even though it had adequate funds to do so. 

From the standpoint of society as a whole, however, the abandonment 

decision equation must be modified retention is justified if G is 

N 

positive, with the equation 



5 ■» [(R. + R ) - (C + C )] + Sh + N + Dr 4- E; 
w d s s sys 



in which: G » net gain ciety 

Sh - "shadow price?' adjustment: adjustment cf costs to reflect 
the difference between real economic costs and costs 
actually incurred. 
N sys = net COtttri &ution of traffic created by the line to the 
national railroad system as a whole. 
Dr - additional amounts shippers would be willing to pay, over 
existing rates, to keep the line in operation. 



-42- 



Ex = value of external to persons other than those 

actually us he line. 
In this case, these items are as follows: 

Sh; The costs of train operation ^ere higher than necessary 

because a six-nan crew was used; four men. were clearly 

adequate for efficient operation. The difference was perhaps 

$8,000 a year, 

N : Since very little of the traffic (a few inbound cars) moved 
sys 

over lines other than the Union Pacific, this figure was 
negligible. 

Dr: While the elevators were anxious to keep the rail line, 

clearly they were willing to pay very little more to do so- 
given the avail.? y of other forms of transport. 

Ex: Externalities. Given the other i'leraf in the equation, 

externalities of a value of $ 63 per year would have been 
required to justify continued operation of the line. 

G = -71,000 + 8,000 + + + Sx 
Ex - 63,000 if G * 

The principal externality to the area as a whole was that of keeping 

the wheat trucks off the highways, The gain from this is difficult to 

quantify, but value judgments suggest that the negative externalities from 

the grain trucks are not very significant. Thus, the only justification 

would have been the overall prestige externality of avoiding one more 

blow to an area that in some ways was declining, and retention of the line 

for possible future industrial development or in the event of change 

the direction of traffic flow of wheat. But the possibility of 



-43- 



subsidization or of the county taking over the line (which it could have 
purchased /or salvage value or ever less}" 1 was certainly not seriously 
considered and apparently net dered at all (despite the example 
provided by Prineville, 100 miles to the south, with its long and 
successful operation of a railroad). Lue judgments of persons in 
the county were obviously the same as the author's: that subsidization 
out of tax revenue of >ssibly more— was simply not 

warrantee, given the alternative uransport forms available. 



The Union Pacific, might have given trie county the line if it were 
to be kept in operation. 



-44- 



THE C; RAILROAD 

To th, vest or n County s 3 County, wh .nee covered all 
eastern Oregon and parts at is now Id gradually carved down to 
its present size. -ore diverse county than Sherman* some 

portions much more fertij watered' er portions covered with 

forest* sti ! I other segments, near the Deschutes, resembling Sherman. The 
county seat is a major commercial and transport center for 

central and eastern Oregon, 

Buildi ng oi. .Iroad 

Around the turn of the century 5 several plans developed for building 
a railroad south frcr* The D2l1.es, but not until L904 was construct., 
actually undertaken. The immediate aim was Dufur, 15 miles south 
The Dalles by road, center of a a atural area, primarily wheat. 

A secondary objective u?as the timber of Mi ^ood Nat ?est 

of Dufur. There g into ce egon, 

but tne great obs and id tc the Deschutes 

were discouraging fsctors, ar .l building of the :hutes !Uver line 
put an end to this Lo Dufur, November 30* 

1905. tn 1912-13 the village of Friend, in 

the tim . ntry between Tygh valley of Fifteen Mile 

Greek. The line was built by John Heiiarich, , who had made a fortune 
in Colorado minrng and moved to the it, making investments in a 
number of fields, B run by his son John, Jr. and the rail- 

road from the beginning to end was almost synonymous with John Ke 

To avoid the hills south of The Dalles which the stagecoach road and 
TEodern highways crossed, the railroad followed Fiftee on its 



-45- 



long circuitous path to r, swinging far to the east* close to but high above the 

Deschutes } between rough and jumbled hills far taore tortuous than those of 

Sherman County. The rail mileage to Dufur was thirty, twice the road mileage. 

When the extension was built to Friend, the line left the valley and 

climbed steadily up the ridg. theast of Fifteen Mile Creek, from about 

1,000 feet at Dufur to 2,500 feet. The shops were originally located in 

Dufur, and the daily train came down to The Dalles in the morning, back 

in the evening. Later the shops were moved to The Dalles. Regular passenger 

service ended in 1928 with the end of the mail contract. The grading was 

limited; new 60 pound rail was used, with little ballast. The cost was 

about $585,000. 

In addition to Dufur and Friend, there were several small villages on 
the line, Petersburg, Wrentham, Emerson, and Boyds being the most important, 
with grain elevators and warehouses. Only Dufur remained a town of any 
magnitude; population is indicated below: 



1900 


336 


1910 


523 


1920 


i33 


1930 


382 


1940 


392 


1950 


422 


1960 


488 




493 



The principal elevators and source of traffic were at Dufur. From begin- 
ning to end the primary traffic was wheat, although in time some lumber 
and log shipments were carried. A small lumber mill was built at 
Friend. The hope of the period around 1900 that the area would become a 



— M-6~ 



major fruic producer failed; rainfall was inadequate and in time the vast 

orchards w re torn out. The north rn fringe of the county produces large 

quantities of sweet cherries, but not in the area the railroad served. 

Traffic, revenues, expenses, and profits for selected years are show 

in Table X. 

Fin ancial Difficult 

In the earlier years the road did reasonably well; it did not cover 

interest in most years, but the bonds were held primarily by the stock- 
holders. After 1921, however, tonnage and the passenger traffic and 
revenues commenced to fall as trucks and cars took over the merchandise 
traffic and the passenger business. With the elimination of passenger 
train service, the road was able to restore operating profits, but unable 
to cover property taxes, on which it commenced to default in L926. 
hope always Lay in greater traffic, and in Heimrich c< ied a 
contract with the Forest Service for the cutting of two billion board feet 

of timber in the Mt. Rood National Forest, and construction was started on 

a lumber mill on the line and the T% iion Pa e miles east of The Dalles. 

The logs would be brought down by rail. Before the mill was finished, lumber 
prices fell; the mill was left unfinished (and became a dance hail), and 
Heimrich eventually lost bis Forest Service contract, despite the effor 
of The Dalles Chamber of Commerce to save it. The railroad struggled on, 
but a series of unfavorable events were to destroy it. The physical con- 
dition of the road deterio I and service became unreliable; the farmers, 
desperately hard pressed by low wheat prices, began to truck their wheat 
to The Dalles for shipment by water. In 1932 the road carried only one-third as 
much wheat as in the previous year. For that year the ton mileage per mile 



TABLE X 
TRAFFIC AND REVENUE, GREAT SOUTHERN RAILROAD. SELECTED YEARS 











Net Revenue 








Operating 


Operating 


from Railway 




Year 


Revenues 


Expenses 


Operation 


Net Income 


1905-16 


average 


$45,331 


$24,096 


$19,601 




1921-30 


average 


52,207 




15,257 


$- 30,121 


1921 




97,909 


59,351 


31,577 


- 21,051 


1924 




65,678 


52,170 


4,549 


- 22,588 


1925 




39,321 


53,547 


-19,976 


- 54,115 


1926 




42,168 


28,892 


5,938 


- 28,277 


1927 




40,941 


26,186 


7,328 


- 27,083 


1929 




33,093 


18,686 


4,916 


- 5,09I J " 


1930 




20,223 


23,078 


- 1,855 


9 225 


1931 




16,008 


9,942 


6,066 


2,294 1 


1932 




5,755 


6,588 


833 


- 4,539 L 


1933 




7,974 


10,064 


- 2,110 


- 3,728 i 


1934 




9,556 


9,296 


266 


- 1,54s 1 


1935-6 mos. 


2,700 


4,200 


- 1,400 


- 2.700 1 



No interest paid 

TONNAGE BY TYPE OF COMMODITY 



Year 



Wheat 



Fruii 



Petroleum 



1921 


30,306 






1924 








1925 








1930 


12,078 


114 




1931 


12,204 


13 





1932 


3,875 





144 


1933 


5,483 


14 


151 


1934 


6,739 


107 


38 



Forest Products 



2,477 



ns 
ns 
ns 
ns 
ns 



ns - not reported separately 

SOURCE: Interstate Commerce Commission, FD 10880 
and Statistics of Railways, Annual 



Total 

34,039 

26,381 

12,856 

12,849 

12,440 

4,051 

5,674 

6,895 



-<w- 



of line was only about 3,000— w figure. The track was so 

bad that i_ was difficult tc rains on the traeK The road was soon 
down to two employees, Reiitrich himself doing much of the work. 

Further complications arose wl imrich's sister, Rose Bull, sued him for I 
share of the father's estate; when John Heimrich, Sr. died in 1911 s he left 
the estate in trust, with John. Jr. as executor for 15 years. Mrs. Hull's 
suit was successful, and she received all of the stock in the railroad 
and $800,000 of bonds. In November of 1932 it was announced that her 
husband, S. A. Hull, a Portland lumber man, would take over the road, obtain 
a new Forest Service contract, and build a box factory in The Dalles — 
meanwhile improving railroad. Some improvements wore actua tade and 
on April 6, 1933, the new management announced the establishment of joint 
rates with the Union Pacific, 1 2 grain rate to Portland to 13£ 

cents a hundred. In 1933 and 1934, operation was spasmodic, but grain was 

moved out in larger quantities and { eum moved in. 

But the line was also plagued by defaulted property taxes-- now in 

default S-i.nce 1926. In January, 932, the county brought suit to collect 
$37,000 in unpaid taxes, and the County CouEt gave title to the county in 
August, But the county made clear that it did not want to force the line to 
suspen ted to insure that o i would c< ne. Concern was 

expressed in The Dalies over inconvenience to the elevators from loss of 
the line and about the fact that if the road were abandoned, the chances 
of a lumber mill in The Dalles would be gi ' reduced. In June of 1933 
after Hull had taken over, the county agreed to accept $5,814 for its 
$34,000 tax lien. In October of 1933 at foreclosure suit, the road was 
awarded to the bondholders— and the road was reorganized as The Dalles and 



-48- 



Southern — I . in f: tnicality, as lo the bonds. 

The attempts to get funds to rebuild the line and pay off the county 
dragged on for two more years; the road operated occasionally to haul out: 
wheat. An attempt to get an RFC loan failed in July of 1935 on the grounds 
that the pro:: the road were too poor. 

In that month, Hull indicated that he planned to junk the line and 
applied for permission to do so. He argued that the line could not be 
operated in its present .shape; the $50,000 to rehabilitate it could not be 
raised; and that the line would not be profitable anyway. Accordingly , in 
August, to prevent Hull from selling the line for junk, the county again 
filed suit to foreclose. Following the granting of I. C. C. approval to 
abandon (decided September 30, 1935), Hull announced that all service would 
end April 30, 1936. Finally on August 13, 1936, the county agreed to 
accept $35 j 134 from Hull to clear away the lien, having gi^en up all hope 
that operation could continue, < l contractor began to scrap the line. 
There were no protests for the request to abandon; the only initiaJ 
objection c?tne from firms ser -p?*- lire in The Dalles that would be 
left without Thi s track and deeded it 

to the Union Pae 
e Effect; 
The immediate effects were not great. Much of the Dufur area wheat 
was already being trucked directly to The Dalles. The elevators in Dufur 
suffered some loss because trucking of grain fr he elevators was somewhat 
more expensive than rail, but the di ice was not great. At about this 

time the Dufur elevators collapsed and were rebuilt on higher ground away 
from the railway right of way. The enterprise, a corporation but farmer- 



-49- 



owned, continues to function as a commercial elevator, the grain trucked 
primarily to Interior iiors ant Cargill in The Dalles for shipment 
to Portland by barge. Grain from the Wrentham-Petersburg area all goes 
directly to The Dalles, either at or out o rra storage. Between 
Bufur and Tygh Ridge, about 40 percent goes into farm storage and thence 
directly to The Dalles; about 60 percent into the Dufur elevator, In 
southern Wasco County, beyond Tygh Ridge t some wheat goes directly to 
The Dalles, the rest to the elevator on the rail line at Maupin (owned by 
Interior Elevators) . The other elevators have ceased to be commercial 
elevators; the ones at Rice and Emerson are used for farm storage by the 
owners, while the one at Boyds is unused. 

The significant effect of abandonment ? however, and one clearly fore- 
-seen* was the effect upon the future location of lumber mills. The Dalles 
did have a mill for a time, but it was abandoned after a few years, partly 
because of problems of getting Ln. If the railway had stayed in 

operation, the mills might have located In the Friend area or Dufur and 
the lumber shippe" by the railroad, or in The Dalles, with the logs 
shipped down by rail. ' [ood - imber cutting began, 

mills were built in Tygh Valle; in Maupin, southeast of the timber 
sources. Neither is an ideal location, Tygh Valley never has had a 
railroad, and the 1 lumb ist be trucked 8 miles to a siding on 
the Burlington Northern - OP line at Sherars. It is not possible to 
obtain figures of the cost of this trucking, but the cost of loading and 



The mill at Maupin burned in 1953 and was purchased and rebuilt by 
the Mountain Fir Lumber Company of Independence* Oregon. Mountain Fir 
purchased the Tygh Valley mill 60. 



-SO- 



unloading the truck. operating them is not negligible. It is reported 
that the trsk requires one truck ai I driver full time The situation at 
Maupin is little better. Maupin is located on the steep west bank of the 
Deschutes, the railroad tracks at tb torn, the only leve] ground one 
thousand feet, more or less, above. The site of the town itself is suitable 
only for a training school for Rocky Mountain goats. The mill is of course 
on the plateau above-, and the lumber must be trucked down the steep road to 
the rail siding. The chips are ingeniously sent down through a pipe 
directly into the freight cars 1,000 feet below. 

If the Great Southern had not been abandoned, therefore, the mills 
might have been located in a more optimal location and The Dalles 
would have benefitted. But no thought was given in the 1930s to having 
the city or county take over and operate the line to preserve it, 

In general, the Great Southern was a victim of circumstances. Had 
national recovery of the economy, with higher lumber prices, come sooner > 
the opening of lumber product! ve saved the line in all probability. 

Had John Ht Lmrich not been so lily feuds and if he had dealt 

somewhat differently with his shi] ? he might have been able to carry 
the road through until recovery came. From the standpoint of agriculture, 
the loss of the railroad was not ficaut; from the standpoint of 
lumbering it clearly -.as-. Had nol inessmer. of The Dalles been 
financially hamstrurg by the depr lures, an. organized 

attempt might have been made to save the road. 



'"Heimlich was basically a very wealthy man, but his assets were highly il- 
liquid. Despite his wealth he spent ffuch of his time maintaining the 
locomotives, But it is reported that he had an unfortunate tendency to 
ury to squeeze too much out of 3cme of the shippers for too little in the 
way of service. 



-51- 



CON ONS 

Study of the abandonment of tl \ Union Pacific's Shaniko line and i 
the Great Southern suggests the following conclusions: 

1. When water transport to the destination is within economical trucking 
distance of the shipping points and the product can he transferred from 
truck to barge ail mechanically, the abandonment of a railroad has 
little effect on the industry — in this instance wheat production—formerly 
dependent upon the line. The evidence in this study suggests that 50 miles, 
roughly, is the breaking point for truck-barge operation before costs come 

to exceed those of direct rail transport. 

2. When rates on a line rise with distance, little harm is done to the 
shippers at more distant points on the line by abandonment; with blanket rates 
the distant point shippers enjoy an advantage under all-rail transport that 
they cannot receive under other forms and suffer losses if the line- 
abandoned . 

3. If a product is hipped long distances, water transport 
is not available, transfer from tr ck to rail is expensive, and rail 
rates ^efle - >ng distance bulk traffic costs, loss of a branch line can 
have significant, influence on location of plants and can result in higher 
costs. This i. ity lumber production experience. 

4. When the population of an agricultural area is relatively small, 
and inbound shipmen feed and fertilizer are either minor or can move 
by truck at little or no greater cost, the loss of the railroad line is not 
of serious consequence from the standpoint of inputs of production. This was 
certainly true of Sherman County. 



-52- 



5. The ability of the Union Pacific to operate its Sherman County 
line with a more than adequate return on salvage value over a long 
period of years with ton miles per mile of line between 60,000 and 70,000, 
despite use: of a six-man crew and no deferral of maintenance, raises serious 
doubts about the validity of the D. 0. T. figures used in the proposed 
restructuring of the northeast railroads. This line would never have met 
the requirements for inclusion in the proposed northeast system. One 
favorable feature, not recognized in th& D, 0. T. proposal, is the fact that 
bulk shipments of grain do not require daily service, 

6. The extreme fluctuation of earnings from year to year, caused 
primarily by the exact timing of the. sale of the crop (whether most of it 
moves before or after January 1) demonstrates the serious objection to 
evaluation of the viability of rail lines on the basis of data for any 
one year. 

7. The experience with the flood damage demonstrated vividly the differ- 
ence between the earnin;?::> necessary to warrant continued ox>eration of a 

line with existing i investment is required 

to reconstruct portions a 

8. when rates on a branch line increase with distance, as on this 
line, the D. 0. T. type of formula for deter ig viability of a line is 
completely unsatisfactory, based as it tpon the assumption 
that the rate is the same to any point on the line. 

9. With traffic at the levels of the Sherman County line, rail costs 
per ton mile on the line itself are slightly lower than truck cost-; if 
return on investment is not included, and about thi e it" return on 
salvage value is included. 



UNIVERSITY OF ILLINOIS-URBANA 

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3 0112 060296743 



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